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Amazon.com Reports 29 Percent Sales Growth, Book Sales Up 12 Percent

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November 1-15, 2004 Edition

Amazon.com Reports

29 Percent Sales Growth,

Book Sales Up 12 Percent

SEATTLE, WA/10/21/04—Amazon.com, Inc. (NASDAQ: AMZN) announced financial results for its third quarter ended September 30, 2004.

Sales in Amazon.com’s North America media group, which includes books, increased 12%, to $563.6 million, for the period, slightly less than the 15% boost experienced in the comparable quarter for 2003.

Net company-wide sales were $1.46 billion in the third quarter, compared with $1.13 billion in third quarter 2003, an increase of 29%. Net sales, excluding the $57 million benefit from changes in foreign exchange rates, grew 24% compared with 2003.

Operating income was $81 million in the third quarter, compared with $52 million in third quarter 2003. Consolidated segment operating income grew 29% to $95 million in the third quarter, compared with $74 million in the third quarter 2003. Excluding the $4 million benefit from changes in foreign exchange rates, consolidated segment operating income grew 23% compared with third quarter 2003.

Net income was $54 million in the third quarter, or $0.13 per diluted share, compared with net income of $16 million, or $0.04 per diluted share, in third quarter 2003. Pro forma net income in the third quarter grew 52% to $73 million, or $0.17 per diluted share, compared with $48 million, or $0.11 per diluted share, in third quarter 2003.

Operating cash flow was $490 million for the trailing twelve months, compared with $284 million for the trailing twelve months ended September 30, 2003. Free cash flow grew 76% to $420 million for the trailing twelve months, compared with $239 million for the 2003 period.

Common shares outstanding plus shares underlying stock-based awards outstanding totaled 434 million at September 30, 2004, compared with 433 million a year ago.

“Our decision to put dollars into lower prices and free shipping instead of TV advertising continues to be embraced by customers,” said Jeff Bezos, founder and CEO of Amazon.com. “Customer adoption of free shipping hit another record high this quarter.”